Owning traditional investment properties is a great way to earn consistent passive income. However, owning vacation rentals can offer higher profit margins and room for investment growth. If you’re considering turning your investment property into a vacation rental, read along as we go over the pros and cons, necessities, and marketing tips.
What Is a Vacation Rental vs. Long-term Rental?
Vacation rentals and long-term rentals have several differences. For instance, a vacation rental differs from a long-term one because it’s rented out for shorter periods. As the name suggests, most people use vacation rentals as a place to stay on vacation or while traveling for work. A long-term rental generally has a 6-month or 12-month lease, whereas a vacation home is rented out for a few days or weeks.
Additionally, a vacation rental is typically equipped with everything you’d need to stay for a few nights. On the other hand, a long-term rental is left completely empty for tenants to put their belongings inside. A vacation rental is fully-furnished, with small appliances, kitchen necessities, bedding, toiletries, and entertainment.
Another major difference between vacation rentals and long-term rentals is the price. Landlords typically charge monthly for long-term rentals, whereas vacation rentals are usually charged per night. That said, vacation rentals are typically more expensive to stay at, priced more like a hotel. Additionally, prices aren’t fixed–they may differ by the day. Rental owners commonly charge more during the weekends compared to weekdays.
Pros and Cons of Turning Your Property Into a Vacation Rental
Investors are fond of vacation rentals for many reasons. For instance, the profit margins are typically larger, and owners can adjust prices seasonally to offer better returns. However, there are a few cons to note before turning your property into a vacation rental. Here are some of the main pros and cons of vacation rentals.
Pros of Vacation Rentals
- More Income– You can charge more for vacation rentals, especially on holidays and weekends, which puts more money in your pockets.
- Tax Deductions– Since it’s a business, you can write off business-related expenses, like maintenance, utilities, mortgage interest, hosting fees, and more.
- Personal Getaway– Since you have your own vacation rental, you can use it for a personal getaway for a week if you want to. However, you’ll lose out on profits if you’re not renting it out.
Cons of Vacation Rentals
- Higher Upkeep and Maintenance– Vacation rentals require higher maintenance and more upkeep. For instance, you have to hire someone to clean after one guest leaves, and another comes to stay.
- Unexpected Expenses– With more maintenance, unexpected expenses may pop up. After all, things are bound to break or go missing when you have several occupants in and out of your vacation home.
- Varying Local Laws and Regulations– Every city or state has different laws regarding short-term rentals. Some areas have restrictions on short-term rentals, while others support vacation rentals. Therefore, it’s important to research which areas allow short-term rentals before putting time and effort into your investment.
What Does Your Vacation Rental Need to Have?
There are a few things that your vacation rental must have that are different from a typical rental home. After all, you want to keep tenants happy and profits high. So, here are a few essentials for your vacation rental home.
- A Good Location
- Security Features
- Cleaning Procedures
- Extra Supplies for Occupants
A Good Location
You could lose potential business if your vacation rental isn’t in a desirable location. You must have a good spot for your vacation rental that will attract tourists and travelers. After all, nobody wants to stay in a vacation home that requires additional traveling to see local sights. People want to stay in vacation homes that are accessible and nearby local attractions.
Your vacation rental should have security features to ensure your tenants feel safe and that you have more peace of mind while letting strangers stay in your home. Consider adding cameras outside your vacation rental and a secure lock for the door. Most vacation rental owners have a keypad lock with a passcode for renters to use. Then, they change it for each renter who books a stay at their home.
Your vacation home requires deep cleaning in-between every occupant that stays there. Usually, during peak seasons, occupants are frequently in and out of vacation homes without much time in-between. As such, it’s crucial to go in and clean before your next occupant arrives for their stay. Most rental owners hire a cleaner or cleaning team to deep clean between occupants. Contact your local property management company in Washington DC if you need help finding someone to maintain your vacation rental.
Unlike a typical long-term rental home, you should provide some entertainment in a vacation rental. For instance, make sure there are televisions with cable or streaming services. Some vacation rental owners also offer video games, board games, or books for entertainment. To give your occupants the best stay possible, include some entertainment for them to enjoy when they’re not exploring the town.
Extra Supplies for Occupants
Vacation rentals generally have toiletries, bed linens, and kitchen essentials for occupants. For instance, you should provide toilet paper, towels, and hand soap for the bathroom. Likewise, beds should have sheets, blankets, and pillows for guests, and the kitchen should be stocked with basic utensils and supplies. Although not always necessary, vacation rental owners should consider these basic amenities to ensure an excellent experience for occupants.
Tips for Marketing a Vacation Rental
Marketing a vacation rental is different from marketing a long-term rental property. For instance, you have to consistently market your property to ensure that guests can find it and book it for the duration of their vacation. Here are a few tips for marketing your vacation rental property.
- Use Professional Photos
- Price Your Rental Competitively
- Keep Good Communication
- List Your Rental on Mulitple Sites
- Strive for Good Reviews
Use Professional Photos
The photos you use for your vacation rental listing are crucial in finding occupants. If you use poor-quality images that don’t show off the entire property, renters may look for a rental elsewhere. On the other hand, if you use professional photos that show the property’s amenities, bedrooms, bathrooms, and exterior, it gives prospective renters a better idea of where they’d be staying.
Price Your Rental Competitively
When it comes to vacation rentals, competitive pricing matters. After all, you don’t want to lose out on profits that other comparable rentals are making. On the other hand, occupants may look elsewhere for lodging if your rental is too high. So, continuously monitor the market to ensure you’re not overcharging or undercharging for your vacation rental.
Keep Good Communication
If someone’s interested in your vacation rental, respond to them quickly and effectively. Although it can be difficult for busy rental owners, responding to inquiries within 30 minutes or less is best for keeping potential renters interested. An excellent idea for those who don’t have the time to answer several questions a day is to create a FAQ section under your listing so your renters will have fewer questions for you.
List Your Rental on Multiple Sites
List it on several websites to make it easier for vacationers to find your vacation rental. Some popular vacation rental sites include Airbnb, Vrbo, Booking.com, TripAdvisor, and more. If you’re having a hard time finding renters, branch out to more listing sites to make it easier for occupants to find your rental.
Strive for Good Reviews
Five-star reviews will keep occupants coming back and attract new renters for your vacation rental. If potential renters see that you’ve provided an excellent experience, they will likely book your property for their next vacation. On the other hand, if your reviews are poor, it might steer potential renters away.
Manage All of Your Rentals With Ease
Whether you have a long-term or vacation rental home, ensuring your properties are managed correctly is vital. After all, you want your tenants to be happy enough with their stay that they come back again. If you want to ensure all your investment properties are taken care of and managed properly, it may be time to hire a trusted property management team.
Bay Property Management Group offers comprehensive rental management services for any of your investment properties. We can help with tenant screening, rent collection, maintenance, rental registration, compliance, and more. Contact BMG today if you need rental management services in Baltimore, Philadelphia, Northern Virginia, or Washington DC.